NEW: Kroger said it will buy Albertsons in a deal that would combine two of the nation's largest grocery chains.
Kroger said Friday morning it will buy Albertsons in a deal that would combine two of the nation's largest grocery chains.The deal carries an enterprise value of $24.6 billion and combines the second and fourth largest U.S. food retailers, with around 8% and 5% market share, respectively.Grocers are dealing with a slew of challenges, including runaway inflation and competition with value chains and online retailers.
"Such consolidation would, in theory, improve the economics for both businesses giving them even more buying power than they currently enjoy and providing an opportunity for significant savings in central operations," GlobalData retail analyst Neil Saunders wrote Thursday. "In an environment where Amazon and Walmart are the mega giants pushing deeper into groceries and grocery delivery, teaming up seems like a potential strategy to stand up against them,"Kroger had about 2,800 supermarkets, distribution warehouses and food production plants as of Jan. 29, including its namesake stores, Harris-Teeter, Fred Meyer and Roundy's
Albertsons had 2,276 stores as of Feb. 26, including its namesake brand, Safeway, Jewel-Osco and Acme."There is overlap in the two store estates, particularly in the West, and there will, no doubt, be some closures if a merger goes ahead," Saunders wrote.
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